Segwit stands for ‘Segregated Witness’ and it refers to a Bitcoin upgrade that allows for more transactions to fit onto each block, making Bitcoin faster and cheaper. Technically, SegWit works by decoupling signature data from transaction data and freeing up more space on each block.
SegWit divides a transaction into two halves, reducing the weight of transactions in a block on the blockchain and effectively boosting the number of transactions that may be included in a block of the same size. The sender and receiver’s wallet addresses are in the first section of a transaction, while the "witness data" including transaction signatures are in the second. SegWit eliminates "witness data" from the main block, resulting in a significant reduction in transaction size.
The Bitcoin community agreed to activate SegWit.